The announcement of the referendum immediately triggered strict
capital controls — a closure of the banks, with limits on
depositors' cash transfers and how much they can take out of ATMs
— and still the country is down to its last €500 million ($772.6
million).

The announcement also led to the suspension of negotiations. So
now Greece has no cash, is no closer to a deal, and has weakened
its position at the deal table.

Greece was given the simple "yes" or "no" ("nai" or "oxi" in
Greek) choice on Sunday over whether it should accept a range of
austerity measures set out by the country's creditors in exchange
for more cash to keep the nation afloat. The proposed austerity
included pension cuts and tax increases.

Can you blame them? Look how terrible Greece's economy is at the
moment. This chart from the Royal Bank of Scotland summed up how
the collapse in its gross domestic product "is among the worst
advanced-economy falls since 1870." (Even more devastating, most
of the other economies collapses were due to war.)RBS
Economics

The Greek Prime Minister knows that the question asked in the
Greek vote was no longer valid. I'm against a Grexit but we must
discuss what 'respecting the Greek vote' means ... I'm very
saddened that the Greek delegation left the negotiating table —
you don't do that in Europe. It was a big mistake. We must try
and find a solution.

Juncker also called the referendum "irrelevant" and a "circus" in
a speech to European Parliament on Tuesday,
according to The Times. And if you look at the circumstances
now, it's hard to disagree with him.

Technically pointless from the start

Greek
Prime Minister Alexis Tsipras.Milos
Bicanski/Getty Images

Not only was the call for a referendum pointless in getting
Greece "a better deal" — what Greeks were voting for didn't apply
after June 30.

This is not a trivial claim — it's a technical and legal one.
Like most deals, terms and conditions are presented to you on
receiving the offer. A date is applied to your decision, and you
have a deadline to deliver your verdict.

If something massive happens, such as defaulting on payments from
another loan you already have, this can also invalidate the offer
in front of you.

Debt is not a guarantee of future payments in full. Rather, it is
a risk that creditors take, in hopes of maybe being paid
tomorrow.

The key word there is "risk."

If you're willing to take the risk, you'll get a premium — in the
form of interest.

But the downside of that risk is that you lose your money. And
Greece just called Germany's bluff.

That may have taught the creditors "a lesson," but that doesn't
mean it will improve Greece's future. Who wants to lend to
someone
who can't, or simply refuses, to give you your money back, or
even resists working through how you can help repair the tattered
remains of the borrower's balance sheet? It hurts the Greek
credit rating too, making it even more expensive for the country
to borrow money.

So from the outside, the markets and European politicians saw the
call for a referendum as a diversionary tactic, Greek Prime
Minister Alexis Tsipras' way of passing the pressure and the
blame onto the Greek people when the country tumbles into a
recession.

Post-referendum: 'The Greek economy is now in
much worse shape'

People
celebrated in front of the Greek parliament on Monday in Athens,
Greece, after Greeks rejected the debt-bailout
proposal.Christopher Furlong/Getty
Images

The banks have been loud and clear on this issue.

This week, Bank of America Merrill Lynch wrote a note titled
"Greece: Time for the Adults to Speak." Here is the key passage,
which is worth reading in full:

The paradox is that Greece will now have to agree on a new
program with the creditors, with tougher conditions than in the
proposal that the referendum has just rejected. This is because
the Greek economy is now in much worse shape following
this week's events, and particularly the closure of
banks and the introduction of capital controls.

The economy will go back into recession, the fiscal targets will
be even more out of reach, and banks are likely to need more
capital. Negotiating and approving such a program will take time,
while the Greek economy will be deteriorating.

Moreover, everything needs to be finalized in the next two weeks.
Greece needs more loans to repay €3.5bn to the ECB on July 20.
And Greek banks need an increase in the ELA, as they could run
out of cash as early as this week. Therefore, the two sides will
need to finalize a deal on a new program this week, and the Greek
and European parliaments will need to approve it next week.
Otherwise, a Greek economy starved for cash and a default to the
ECB will increase substantially Grexit risks, in our view.

Essentially, now, Greece finds itself in an absolutely terrible
position to get any sort of deal if it really, really wants to
stay in the euro.

The referendum did not make the requirement to repay €240 billion
($266 billion) of loans from eurozone creditors and the IMF
disappear. It still has to make those payments. Only now it has
managed to cripple itself by taking itself away from the
negotiating table, as Juncker put it.

Here is the timeline for Greece's next set of
payments:

Barclays
Research

July 20 is the next deadline for a debt payment, but as Barclays
analysts said earlier this week, Greece is unlikely to make this
payment or others, as the country has run out of cash.

This is hardly "progress" that was touted to be made by voting
"no." The "oxi" vote pretty much has succeeded only in speeding
up the process of pushing Greece out of the euro and isolating
itself from the nations that funnelled cash into its battered
balance sheet.

Greece can now only get a worse deal

The Greek government has already clearly indicated that it is not
actively seeking to take the country out of the euro. We have
long argued that the day the European Central Bank cuts off
(emergency funding) ELA is de facto the day that Greece would
leave the euro. At the same time, it is clear that the ECB has no
appetite to front run the political process and as long as
discussions are ongoing between the Greek administration and the
euro area we consider it unlikely that the ECB would fully cut
the ELA and Greek banks’ access to ECB liquidity facilities.